A number of developmental disorders and pathological conditions arise from defects in conserved cell-cell communication pathways, such as those mediated by the Hedgehog family of proteins. Recent studies have documented the important role of protein export mechanisms in shaping the activity of Hedgehog and other signaling molecules in development and disease. Hedgehog can be released apically or basally, in large multimeric or small monomeric forms. It can travel over many cell diameters in long cellular extensions, such as cytonemes and axons, prior to release. The mechanisms underlying Hedgehog export and transmission are complex and unresolved, and yet touch on many cellular mechanisms that go awry with pathological consequences. This proposal addresses this less well-studied area of Hedgehog biology. We will address Hedgehog's export mechanisms, and especially focus on a novel mechanism for axon transport that carries Hedgehog to axon termini on organelles known as lipid droplets. We will thus identify new targets for controlling this pathway in development, regeneration and disease. The Drosophila visual system offers an excellent opportunity to unravel the complexity of Hedgehog export and transmission. In this system, apical Hedgehog secretion propagates the temporal wave of ommatidial development that gives rise to the compound eye; basal targeting, transport and release from photoreceptor axon termini triggers the differentiation of post-synaptic neurons in the brain. Partitioning Hedgehog for release at the opposite poles of a photoreceptor neuron is critical to the coordinated development of these neurons, which assemble into a precise neural circuit. Hedgehog is composed of N-terminal and C-terminal domains that dissociate by self-catalyzed proteolytic cleavage. The N-terminal product, HhNp, harbors all known signaling activities. We recently discovered that polarized HhNp export involves an unusual choice of export pathway that is directed by the C-terminal self- cleavage product HhC. HhNp, when associated with HhC, is incorporated into lipid droplets. These droplets are basally targeted, bypass the Golgi apparatus, and travel by fast axon transport to the brain. Some nascent Hedgehog polypeptide is cleaved near its C-terminus, which removes an axonal targeting signal. HhNp associated with this shortened HhC is secreted apically and remains in the retina. This binary choice of export pathways balances Hedgehog activity between the developing eye and brain. This proposal aims to resolve the molecular details of this novel export mechanism. We will define the cis- acting Hedgehog polypeptide sequences involved in export pathway decisions. Since nothing is known about a role of lipid droplets as axon transport carriers, we will conduct a general and unbiased genetic screen for components of the underlying molecular machineries, and use biochemical and cell biological methods to investigate their functions. Finally, we will employ a new method for live imaging of axon transport in differentiating photoreceptor neurons to analyze the kinetics of Hedgehog and lipid droplet axon transport and characterize newly identified export machinery components. Investigating this novel pathway will uncover a new set of targets for interventions into developmental anomalies and pathologies involving the Hedgehog pathway, protein trafficking and axon transport.